Fed

The Federal Reserve System is the central banking
system of the United States of America.

The body was established by Congress more than a
century ago, when President Woodrow Wilson signed the Federal Reserve
Act into law on December 23, 1913. Prior to the creation of the Fed,
the U.S. economy was plagued by frequent episodes of panic, bank
failures, and credit scarcity.

The Fed has supervisory and regulatory authority over
many banking institutions. In this role, the body promotes the safety
and soundness of the banking system, fosters stability in financial
markets, and ensures compliance with laws and regulations under its
jurisdiction.

Current functions of the Federal Reserve System are:

To serve as the central bank for
the United States;

To address the problem of banking
panics;

To strike a balance between
private interests of banks and the centralized responsibility of
government (to supervise and regulate
banking institutions, to protect the
credit rights of consumers);

To maintain the stability of the
financial system and contain systemic risk in financial markets;

To provide financial services to
depository institutions, the U.S. government, and foreign official
institutions, including playing a major role in operating the
nation's payments system, to facilitate
the exchange of payments among regions, to
respond to local liquidity needs

To strengthen U.S. standing in the world economy

To
influence monetary policy, the bank has three main tools at its disposal:

Open-market operations

Setting the discount rate

Setting reserve requirements

Open market operations is the Fed's most frequently
used monetary policy tool. This consists of purchasing and selling U.S.
government securities on the open market with the aim of aligning the
federal funds rate with a publicly announced target set by the
Federal Open Market Committee.

Today's Chair of the Board of Governors
of the Federal Reserve System is Janet Louise
Yellen, an American economist, who has previously served as Vice
Chair from 2010 to 2014.